Henry Blodget. Remember him? Yes, he is the former (in)famous Merrill Lynch analyst who was so intimately associated with the go-go Internet era. Well, he is back, not at Merrill Lynch mind you, but at his own weblog Internet Outsider.
Blodget has two excellent articles regarding Google that deserve reading.
I completely agree with Blodget on his following comment.
Second, no one knows for sure what stocks are worth. No one. If you don't believe this, get a spreadsheet, project a hundred years' worth of cash flows for Google, and discount them to the present. Don't forget that Google could end up like Microsoft or like DEC (very different cash flows) and that an appropriate discount rate--one that compensates you for the risk to the cash flows--could range between, say, 7% and 20%. When you think you're done, change your assumptions a bit and see what happens to the "fair value." Change them again. Eventually, you'll probably conclude that the stock is worth somewhere between $25 (cash per share) and $1,000. Now pick your price target.
Blodget presents well reasoned arguments in an articulate manner. I highly recommend reading both articles.
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